Like it or loathe it, the Budget affects everyone - so it’s worth keeping an eye on.
It generates a lot of noise, but what most really want to know is simple: how will the Budget affect your business and its prospects for the year ahead?
With a few new policies outlined, we thought we’d walk you through some of the key measures the Government is introducing for small businesses.
Easing the pathway to reopening
The Government has already mapped out the dates for our post-lockdown reopening - and this Budget has given some reassurance that business owners won’t be left in the lurch in the meantime.
According to the Government, the Furlough scheme's extension to September 2021 could make a difference if you won’t be ready to reopen as restrictions lift, or if you’ll have to operate at limited capacity in the short-term – for example, outdoor hospitality only.
Restart Grants will be available for high street shops and hospitality businesses – up to £6,000 for non-essential retail businesses and £18,000 for hospitality, gyms and personal care businesses. And if you’re a hospitality company, the Chancellor Rishi Sunak notes that you’ll also benefit from an extension to the current VAT cut. VAT for all hospitality businesses is to remain at 5% until September 2021, and then rise to 12.5% until April 2022.
Corporation tax
All limited companies must pay corporation tax on their profits, and from April 2023, this tax will rise to 25% for companies with annual profits of £250,000 or more.
If your profits are under £50,000, you’ll remain at the current 19% rate. And, if you’re somewhere in-between £50,000 and £250,000, the Government’s guidance states that you won’t pay the full 25% on everything, as the rate will be tapered in line with your profits.
Recovery Loans are on the way
The pandemic has meant that even some of the most prudent and well-run businesses have been unable to avoid financial difficulty. If you’re struggling to make it through to the light at the end of the tunnel, it might be a good idea to investigate the Government’s new Recovery Loan Scheme.
From 6th April 2021, the scheme will give eligible businesses a chance to access loans of between £25,000 and £10 million, with a Government guarantee to lenders of 80%. Monzo won’t be one of the lenders in this scheme, but look out for government guidance on how to access the loans if you need short-term support during the pandemic.
Plugging the gaps in self-employed support
If you’re self-employed and you’ve filed a tax return for the 2019/20 tax year, you’ll now be eligible to apply for the Government’s quarterly SEISS grants. The Government estimates that up to 600,000 recently self-employed workers will now be able to access the grants, which will continue until September 2021.
Management skills and IT discounts
Expanding your leadership skills is an essential part of business growth, but it’s not always easy to access the support you need.
That’s the Government’s thinking behind the new Help to Grow scheme, which will provide subsidised management training, digital skills development and discounted IT software for small businesses. You can register your interest, ready for the scheme’s summer launch.
Time to take on a trainee?
If your business is growing fast, it could be a good time to take on a trainee. The Government is prepared to pay companies £3,000 per apprentice to try and triple the number of apprenticeships in the UK.
Introducing… the super deduction
To encourage more companies to invest in equipment, the Government has created a new super deduction that it says will allow you to deduct these investment costs from your tax bill, reducing your taxable profits by 130%.
This might sound a bit complicated, but to use Rishi Sunak’s own example, it means that a construction firm buying £10 million of new equipment could reduce its tax bill by £13 million.
Keep an eye out for ‘tax day’
If you’re confused about the status of some of the UK’s longer-term tax policy proposals, don't worry – these have been pushed back a couple of weeks to March 23rd. Badged as ‘tax day’, we’re expecting the Treasury to publish various tax consultations, potentially including business rates reform or the much-discussed digital sales tax.
How relevant is ‘tax day’ to your business? Well, it’s hard to say at this stage, but some of the consultations could end up becoming policies that affect your industry for years to come.
Finally, don’t forget your employees
Millions of households have faced financial worries and uncertainty over the past year. So while your business might not be affected much by the Budget, the same may not be true of your employees.
It’s not always easy to talk about money troubles within the workplace. But you might want to remind staff that your door is always open if they want to talk about any concerns.
Need more info? Check out these helpful websites
The full detail of the Budget racks up a whopping 107 pages, if you’ve got the time (and stomach) for it.
We’ve focused on the changes we think are most likely to affect our business community, but you can also check out this comprehensive list of Budget policy announcements.
This information has been taken from the government website, gov.uk, and this blog post was written on 5th March 2021. Check the government page here for more information.